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The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance Paperback – January 13, 2010
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From Publishers Weekly
J. P. Morgan Sr.'s close relationship with Teddy Roosevelt; his son Jack Morgan's clientele of governments, finance ministers and central banks; and the Morgan realm's split under New Deal legislation are examined in detail in this National Book Award winner. "Packed with revelations, Chernow's mammoth history demystifies the inner workings of the secretive Morgan banking empire," PW said . Photos . Author tour.
Copyright 1991 Reed Business Information, Inc. --This text refers to an out of print or unavailable edition of this title.
From Library Journal
Chernow vividly portrays the influence that the Morgan banks have had on the history of the Western economy since the late 18th century. The epic story of the development of the American industrial experience is inextricably related to the history of the Morgan banks. Though this fascinating story is virtually the same as that told by Kathleen Bunk in Morgan Grenfell 1838-1988 ( LJ 12/89), Chernow adds color and personality with an emphasis on the 20th-century development of the bank. Working with recently discovered Morgan archives, he reveals institutional details long hidden by the protective secrecy of the family. This superb history will be an important book. BOMC, Fortune, and History Book Club featured alternates. --Joseph Barth, U.S. Military Acad. Lib., West Point, N.Y.
Copyright 1990 Reed Business Information, Inc. --This text refers to an out of print or unavailable edition of this title.
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Top Customer Reviews
No one should be intimidated by this book's length or the complexity of its subject. Its pages are rich with lively portraits of the sometimes quirky men who ran the Morgan banks, the high and mighty of the world with whom they did business, and the world's many critics of such concentrated economic might. Pierpont and Jack Morgan and their successors at the top get the most detailed treatment, but figures as diverse as Brandeis, Mussolini, Lindbergh (the son-in-law of a top Morgan partner), Bryan, Theodore Roosevelt and Margaret Thatcher all play a part in the story, not to mention interesting but lesser-known figures like Ferdinand Pecora, Judge Harold Medina and central bankers from Britain, Germany, Italy and Japan.
As a backdrop to the Morgan saga, this book includes accounts of the main events of 20th-century financial history, such as the Panic of 1907, the creation of the Federal Reserve system, the Crash of 1929 and the depression and bank failures that followed it, the New Dealers' attack on banks led by Pecora that resulted in the Glass-Steagall Act and the separation of commercial banking from investment banking, and the rise of hostile takeovers, Eurodollars, petrodollars, Latin American lending, junk bonds and the securitization of debt, all refreshingly written for laymen rather than experts.
"The House of Morgan" has perhaps two overriding themes. The first is that as the years have passed, and the Morgan banks have faced increasing competition, the Morgan bankers' need to maintain their global preeminence has led them to take bigger and bigger risks. Some of these risks have resulted in large financial loss, but more often they have resulted in a loss of both public and customers' confidence, which has eroded the very preeminence that the banks seek to maintain. The second theme is that the top Morgan bankers have consistently underestimated the power of government to control what they do, and even make their lives miserable. From Pierpont on down, they have ignored government at their peril. It's almost a certainty that with the next big economic downturn, the Morgan banks will be attacked again, and I hope that Chernow will be on the scene to provide an account of it.
The first half of Morgan is spellbinding. This piddling enterprise that JP Sr nearly seems to `assume' for lack of heirs ... grows in a generation and a half through the synergism of genius among the god-like Morgan partners to become the US Department of State + Treasury, World Bank, IMF and FED but never gambled a dime in the stock market. The exclusivity and watch-maker precision of the Morgan partners in its hay day is simply not resident in modern common knowledge, I think. If not for politicians chasing extraordinary innovators, we might never have had a Great Depression. In the furious run-up to the stock-market carnival collapse, the politicians, not the cooler heads of Morgan prevailed in a populist extravaganza with a very bad ending for all but Morgan who never had a dime in that game. Morgan instead grew fabulously flush with cash as it picked up the ashes.
The FDR Great Depression solution was insane in Morgan-think and if not for WW2, which the Morgan's tried mightily to avoid, there's no reason to believe the US could have ever emerged from the Depression. Only one Morgan partner imagined FDR's Keynes to have a lick of sense after he bankrupted Britain with magic. The mega-value of international bonds was Morgan's mega-wealth and it simply vanished in WW2 national debt repudiations and defaults. Morgan had to teach the newly empowered FDR Fed what to do. Morgan was relieved of the risk of the world and so that's how the US (and its taxpayers) came to be the banker to the world. Morgan was both figuratively and literally `murdered' by congressional witch hunters. This is a very unexpected end. Morgan should have been given the Medal of Honor equivalent for keeping the US solvent in WW2 and losing a fortune fighting a war they never wanted but later acceded as a human necessity.
Morgan was the bastion of the global gold standard. The run-up to Bretton Woods is a fascinating econo-wonk trip from the gold standard perspective. Morgan had already been taken to the woodshed as Britain exited the gold standard and had to return to it in an earlier Keynesian guided calamity that might actually date the death of the British Empire and birth date US financial supremacy.
It's here that I've spent time thinking Morgan through. Morgan was wrong. Bretton Woods created a wholly new thing called the $ institutionalized by the IMF, World Bank and Fed. The world agreed that paper was in every way 'gold'. The $ is observed to be 'gold' in spite of insane debt and commensurate notions of `risk'. Is it possible that the Fed can actually create money by printing? Global economic transaction efficiency seems to demand it. This of course makes no sense. Except that we also see the US interest rate plummet as the US rating falls. We see other `stronger' currencies like the Euro, Yen, and Yuan falter and none can effectively displace the $ at this moment. The $ will not be displaced until someone refuses to honor it and that just doesn't seem practicable as the global non-$ transaction cost is prohibitive.
Chernow's Morgan should have ended just after this climactic-colossal game of fiat cash. The House of Morgan was an extreme meritocracy. After JP Jr, the Morgan lineage cannot cut the mustard. Morgan reinvents itself, struggles horribly in the new cut-throat competition of the `commodity' of regulated banking. There are merely interesting ups and downs as Morgan enters modern memory and Chernow becomes the victim of writers timing and never had the chance to see the super-new Morgan Stanley, et. al ... that by measure is far larger than it ever was (sans the diplomacy era) but that I suppose, is another story.
The `modern Morgan' era ends in the 1980's and is the last half of the book and it is simply overcome by 22 years of events (the book was published in 1990). That's my take-away.